Merchant Payments Digest - 20th Edition

The Merchant Payments Digest is a regular update from Oliver Wyman to keep merchants apprised of developments in the rapidly shifting payments space.


Transformational payments solutions:Amazon is preparing to enter the brick-and-mortar mobile payments market to increase Amazon Pay adoption. Amazon is said to be offering lower payment processing fees and additional marketing services to incentivize adoption and is initially targeting gas stations, restaurants and small merchants, which are not seen to be in direct competition with the internet giant. Additionally, Amazon will attempt to leverage their Alexa product and their Whole Foods ownership to further increase adoption. However, Amazon faces strong incumbents domestically, like Apple Pay – which already is accepted at over 5 million stores – and internationally, like WeChat Pay and AliPay which dominate the Asian market. It is not yet clear how customers will use Amazon pay in stores and what technology will be needed from merchants.

Source: Business Insider


Regulatory landscape:

In response to the settlement of a long-running anti-trust investigation, Visa and MasterCard proposed a reduction in card-present inter-regional interchange fees in the European Economic Area to 0.2% for debit cards and 0.3% for credit cards. Online transactions would be 1.15% for debit cards and 1.50% for credit cards. This move comes after a previous offer from Visa and MasterCard to reduce card fees for tourists in the EU was deemed too low by regulators. This stronger reduction represents at least a 40% reduction in inter-regional interchange fees from current levels. The reduction is subject to market testing by EU regulators before a binding decision is made.

Source: European Commission and Reuters


Customers’ evolving expectations:

Plastic still dominates online sales in the US, but mobile wallets are gaining share, according to Worldpay. While credit cards in the US are still the most popular form of payment for both online and in-store transactions (making up 31.5% of e-transactions and 40% of in-store transactions), they are declining in popularity. If current trends continue, credit cards are expected to lose another 8% of total online sales over the next 5 years. Customers, especially younger shoppers, are increasingly turning to digital wallets, which account for ~21% of online transactions. Driven by increasing acceptance and the rise of m-commerce, digital wallets are projected to surpass credit cards by 2020 for card-not-present transactions.

Source: Digital Transactions


Data:Merchants are increasingly concerned about fraud and the data security of customer payments data this holiday season. While the US has recently adopted EMV card technology to combat in-store fraud, attacks are increasingly moving online. A study by the National Retail Federation and Forrester found that payment card fraud remains the top concern of merchants. Hackers are turning to new malware and cyber-attacking software to get around merchant security systems. The program Magecart was discovered this year by skimming credit card information at checkout from notable merchant websites, including Ticketmaster, British Airways and Newegg. Digital wallets and cryptocurrencies also have been attacked; Check Point Software Technologies last month released a report revealing a new software called CoinHive which allows hackers to hijack cryptocurrency from targets’ iPhones.

Source: National Retail Federation


New providers:

Apexx, a UK-based start-up, is attempting to launch a transparent marketplace where merchants can compare prices and services for payment processing and receive advice on what vendors might be best for them. Apexx’s objectives are to make it easier for merchants to find e-commerce and international payment solutions as well as minimize costs. Apexx claims that it can help save merchants up to 15% on the costs associated with processing credit and debit cards. The product has not yet fully launched, but the company is said to be announcing its first merchant customers in 2019.

Source: Apexx FinTech


  • Microsoft and MasterCard announced a partnership to ‘advance digital identity innovations’. The partnership aspires to develop a universally-recognized digital identity that can be used in financial services, commercial transactions and government services. The two companies will focus the initiative on three key challenges:
    • Fostering identity inclusion by creating digital identities for those without a digital or financial footprint

    • Identity verification for customers to interact with merchants, banks, governments and other digital service providers

    • Fraud prevention for payments and identify theft

    Source: Microsoft and Finextra


  • 7-Eleven is partnering with Citcon to start accepting WeChat Pay and AliPay at 35 Canadian locations in Vancouver and Toronto and plans to expand to more stores over the next few months.

    • Customers will be able to pay with WeChat Pay or AliPay at in-store checkout locations, making it the first convenience store chain in Canada to provide this feature

    • 7-Eleven has been making a push to roll out services to reduce friction for customers and WeChat Pay and AliPay are two key forms of payment for Chinese customers - both domestically and internationally

                Source: Citcon 




  • Shake Shack, a popular US-based restaurant chain, recently announced a redesigned mobile app with a focus on better payment options and faster pre-mobile orders. The new app contains key QSR app features like order ahead and reduction of selection options required for ordering, decreasing order processing time by 50%. In addition, Shake Shack is planning on integrating Venmo and Apple Pay into the app for both card-not-present and in-store purchases.

Source: QSR Magazine 


  • Overstock announced plans to sell its decades-old retail business in the next few months to make a full pivot to investing on blockchain. The company was founded in 1999 to sell home-goods on the internet. However, since 2014 it has invested over $175MM in blockchain through one of its subsidiaries, Medici Ventures. Now, Overstock CEO, Patrick Bryne, has announced plans to sell the retail business as early as February of 2019 and allocate all the remaining funds to Medici. Medici has invested in a range of different blockchain startups from a trading platform, to blockchain based voting and property rights. While none of its investments have returned a profit yet, it’s stock price surged 26% on the announcement

    Source: CNBC  


Oliver Wyman is a global leader in management consulting with offices in 50+ cities across nearly 30 countries. Our Payments practice works with constituents across the payments value chain to deliver insights with real impact, combining deep industry expertise with powerful consulting capabilities. To have a discussion with Oliver Wyman on your payments issues and opportunities, please contact Beth Costa or Rob Mau at

Note that Oliver Wyman believes the curated content to be reliable, but it has not been verified.  As such, Oliver Wyman gives no warranty as to the accuracy of such information.  Oliver Wyman’s curation of such content should not be interpreted as an endorsement of the organizations that published the content.